Cash flows and leverage adjustments

• 成果类型: Article
• 署名作者: Faulkender, Michael; Flannery, Mark J.; Hankins, Kristine Watson; Smith, Jason M.
• 署名单位: University of Kentucky; University System of Maryland; University of Maryland College Park; State University System of Florida; University of Florida
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2011.10.013
• 发表日期: 2012
• 页码: 632-646
• 关键词: Leverage; target; Speed of adjustment; adjustment costs

摘要

Recent research has emphasized the impact of transaction costs on firm leverage adjustments. We recognize that cashflow realizations can provide opportunities to adjust leverage at relatively low marginal cost. We find that a firm's cashflow features affect not only the leverage target, but also the speed of adjustment toward that target. Heterogeneity in adjustment speeds is driven by an economically meaningful concept: adjustment costs. Accounting for this fact produces adjustment speeds that are significantly faster than previously estimated in the literature. We also analyze how both financial constraints and market timing variables affect adjustments toward a leverage target. (C) 2011 Elsevier B.V. All rights reserved.